Taxation and the sustainability of collusion with asymmetric costs

Douglas Turner

Journal of Economics, 2022, vol. 135, issue 1, No 1, 48 pages

Abstract: Abstract This paper explores the sustainability of collusion under either ad valorem or specific taxation in an infinitely repeated duopoly game. I compare ad valorem taxes and specific taxes that generate the same average price or tax revenue in the Nash equilibrium of the stage game. I find that collusion is less sustainable under ad valorem than specific taxation when marginal costs are asymmetric and constant.

Keywords: Collusion; Taxation; Firm asymmetry; Cartel stability; H2; L1; C7 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:135:y:2022:i:1:d:10.1007_s00712-021-00751-x

DOI: 10.1007/s00712-021-00751-x

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